Can LO Work in a Unionized Environment? LO11316

John Farago (
Sat, 7 Dec 96 15:01 GMT0

Replying to LO11178 --

In-Reply-To: <329DDCCB.1769@TRAIL.COM>

Let's take another brief look before we get carried away about the role of
unions in moving organisations towards LO. My direct experience relates to
the UK in the 1970s and Australia in the 1980s, when confrontation between
unions and management - and particularly the maintenance of restrictive
practices which made introduction of flexible working difficult - was
widely perceived as inhibiting wealth creation. Since then my observations
are more from what I hear and read.

Good unions can support LO initiatives that benefit workers and the
company. But it ain't always that easy.

Most organisations exist to harness and use resources to produce and
deliver goods and services to external 'needers' or customers. One
criterion of success (not only for commercial and industrial companies,
but for most public sector and voluntary organizations) is the
maximisation of output with minimum uses of resources. Using fewer people
or paying them less for comparable quality output makes companies more
competitive and/or profitable than others.

Unions largely exist to protect and advance the interests of their
members, defending and promoting those interests not only against
employers, but sometimes also against government, against other unions and
against non-unionised would-be workers. Some unions also have declared
political aims to change the capitalist system.

John Kay (1993) 'Foundations of Corporate Success'; Oxford University
Press, points out that wealth creation and the appropriation of wealth are
separate. Intelligent unions (and intelligent management) realise that
changes (such as implementing LO) and increased flexibility can help to
create more wealth and thus enable all stakeholders including unionised
labour to benefit. But it may not always be possible to get a 'share of
the bigger cake'. Many cakes are today shrinking due to competitive
pressures. So, more for one stakeholder may mean less for another and
conflict may result. Unions legitimately resist changes that adversely
affect their members.

I have one story from the 1970s. We wanted to buy new machines for our UK
manufacturing plant that would double output with the same number of
workers. We intended to transfer older, slower machines to the more
recently established Italian production unit. The UK unions resisted the
introduction of new equipment, fearing job losses. The Italian unions
resisted the old machines and threatened industrial action unless they got
new equipment. They realised that without the latest technology and
working practices, their factory would cease to be competitive. In the
end both Italy and UK installed the new machines and both plants
maintained market leadership.

One other facet: The management in a truly LO environment will establish
dialogue and trusting reciprocal relationships with all its employees, as
well as with customers, suppliers, shareholders and community. [This is
the concept of 'the Inclusive Company' see the RSA Report (1995)
'Tomorrow's Company'.] In an environment of reciprocal trust and respect
between company and employees the need for the union to resist
'exploitation' withers and the role of union officials (specially those
who are employees of the union, not the company and may not understand the
new culture) may weaken.

John Farago

-- (John Farago)

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